"The rich" are fleeing Britain and France following high tax hikes.

French Government Denounces Wealthy Leaving Country After Imposition of 75% Tax Rate

During his campaign for president, France’s Socialist President Francois Hollande famously declared “I don’t like the rich” and upon taking office hit the wealthy with a 75% tax rate....Now wealthy French citizens have responded predictably by moving out of France.
The English have also seen the same decline in wealthy taxpayers after it imposed a 50% tax. They are now going to reduce that tax after the departure of many wealthy Brits and David Cameron controversially pledged to “roll out the red carpet” for any French residents fleeing the massive tax hike. In the meantime, anger at the wealthy continues to rise in France, where “eat the rich” signs are appeared

14. Furthermore, if you leave, you're not allowed to do business in or with the country anymore.

You're forbidden from owning stock in the country's companies. Companies that you own stock in, even one share, are not allowed to import or export from the country, at all, until the company forces you to part with your shares. No trading, period. You're out.

77. True. The US does not have the same constraints that France or any other EU country would have.

"Hell, even if we break a few treaties by doing this, we're big enough that we can get away with it."

I do hope that the president does not believe that we can break treaties that other countries have to follow just because we are bigger than they are. That precedent would make it very difficult to resolve international problems by negotiation and treaty, if other countries thought that we had no intention of living up to our end of the treaties anyway.

3. Our Supreme Court has repeatedly upheld retroactive taxes.

Theoritically, if we had politicians that represented Americans as a whole instead of the international rich and super-rich, retroactive tax increases could be imposed and the U.S. military and other governmental assets could be used to track down those trying to leave and hide their wealth in other countries.

79. When You Demonstrate Some Knowledge Of How Tax Shelters Actually Work, Sir, We Might Talk

82. I know a bit about tax shelters too--but have never had that kind of money

that I need to be very concerned about them.

I do know--and this is true and a fact--that your CI bank accounts are not "secret" or "hidden" as far as the IRS is concerned. They know what you have in there and they know what interest you earn. And YES you do have to declare it. A simple bank account in the Caymans does not equal a tax shelter. I was responding to the issue of secretiveness only.

9. Whatever! Then they were not really French or British; they merely liked the scenery.

10. So what. It opens a niche for the not rich to become rich.

The thing to do is don't allow them to leave and take their money with them. Sure, there is nothing you can do about Swiss or Cayman Islands accounts, but don't let them leave the country with the assets they have in the country and allow them only a limited amount of income from those assets to leave the country, hence they will still have to pay taxes. I believe we used to do that here. If you were living or working in a foreign country, you were only allowed to take out a certain amount of dollars a year. The purpose was to keep the money in circulation in this country.

40. We have something like that, for international money changing:

Sure it wouldn't be between states and probably shouldn't happen in the EU. But it seems a lot of those rich people are going to places like Dubai and other similar havens. I think then they should be forced to pay taxes on the income earned in the place where the money originated. Maybe this is what is needed in future international trade agreements and treaties.

Frankly, my whole attitude is go away. Other people will get rich in your place.

45. Two things

So you contend that if a bunch of wealth leaves a country, new wealth will just fill that void? Where does it come from? Will it come from all of those around the person growing wealthy or will it be created? If it is created, shouldn't we encourage all rich people to leave so eventually everyone is wealthy?

Second, if it just within the EU, there is enough variation between countries that most rich could deal with that. And my understanding is that money IS taxed in the country it is earned in for pretty much all countries.

48. If your last contention is true, then why would they be leaving because of higher taxes? I'm really

not that interested but maybe you have the answer.

As to your other acid questions. In nature, if a species becomes extinct, another species fills in its place. Otherwise, read up on the fall of the Roman Empire or the Bubonic Plagues of the Middle Ages. When the wealthy of Rome disappeared and that of Europe due to plague, it opened up new opportunities. The European barbarian tribes took over the vacant estates of the Romans becoming the emerging kingdoms of Europe and the Plague paved the way for the Renaissance. You can't go wrong learning from history or observing nature.

65. According to Adam Smith, wealth is created when you make something, so

if our industrialists, who are making our things in China, leave then maybe we can make them here again and become wealthy again. Right now we are turning into a third world country of a few haves and millions of have nots. I say good riddance, while we still have a few trees left to make stuff from.

67. Why wouldn't the industrialists

who replace them also just have the stuff made in China?

So is it safe to assume that those rich folks currently in America are not rich because they took money from those who were poor and consolidated it but, instead, created it? For examples, the Walton family?

""Forest growth nationally has exceeded harvest since the 1940s. By 1997, forest growth exceeded harvest by 42 percent and the volume of forest growth was 380 percent greater than it had been in 1920." The greatest gains have been seen on the East Coast (with average volumes of wood per acre almost doubling since the '50s) which was the area most heavily logged by European settlers beginning in the 1600s, soon after their arrival."

Not that it is really relevant since most manufactured goods are not made from wood.

69. Forget them. I really want to get rid of the bankers and insurance companies and nationalize them.

They are parasites and need to be made boring and practical and to serve the needs of the community.

As far as the forest, it was a metaphor. We have so much more to manufacture with. I would rather the forests were left alone personally. The Waltons are basically thieves who do it legally. They can leave forever as far as I'm concerned. Bring back the New Deal policies and 1950's tax rates that have been eroded over time and that's what this country needs.

74. How did the Waltons do it illegally?

And what is to stop the replacements from doing it the same way?

As for high tax rates, it they go too high, we'll see what Britain and France are seeing. If you go back to the 50's and see how many people actually paid that rate, you will find it was very few. As the rates go up, the "highly compensated" will always find ways to get compensation in ways that are not direct income. The key is to find a sweet spot and balance that most people consider fair but also cover the bases to minimize the ability to "hide" the compensation.

For example, people go on and on about the Whole Foods CEO only having a salary 14 times that of the common worker. However, if you dig into it, you find that his compensation is really valued at about $6M/year.

In the event, HMRC data for 2009/10 (the year before the 50p rate was introduced) and 2010/11 (the first year of its existence) appear to show a very large increase in income tax revenue in 2009/10 and a very large drop in 2010/11. This suggests that tax avoidance through ‘forestalling’ (moving taxable income forward from 2010/11 to 2009/10 to pay tax at 40% rather than 50%) inflated tax receipts in 2009/10 and depressed them in 2010/11 (and possibly subsequent years as well). The HMRC report on the impact of the 50p rate shows that total income for individuals with incomes above £150,000 increased from £101.3bn to £115.7bn from 2008/09 to 2009/10 before falling to £87bn in 2010/11 (HMRC, Table 5.1).

Forestalling on this scale makes it pretty much impossible to estimate the ‘long-run’ yield from the 50% tax rate on the basis of the 2009/10 and 2010/11 data alone, because there is no real way of knowing how much of the drop in income in 2010/11 is due to forestalling and how much is due to other, longer run, avoidance factors depressing taxable income, or other behavioural impacts on work by top earners.

83. The Depp example isn't really a good one

I'm no tax expert, but this is what I understood from that article:

Depp retains dual citizenship and the USA is one of the only countries that requires those with dual citizenship to pay taxes to the USA in addition to what they have to pay in the other country. In most other countries, someone with dual citizenship would only pay taxes to the country where they reside most of the year.

So if he spends more than a certain number of days per year in France, then he would be required to pay tax on the same income to both countries and if the tax % France charged him PLUS the tax % the USA charged him totalled 100% or even more than 100%, he'd be working for free or paying for the privilege of working.

He chose not to become a French citizen and also has to make sure he doesn't spend more than 183 days per year in France.

88. didn't mean to blame you -- the press always reports like that, like people are being taxed 75%

32. So what? They still have to pay French tax on French income.

I suppose they could stop investing in French companies as well. But, again, so what? Pretty certain 99% of stock trades are between holders of previously issued stock. Which means none of that money is invested in the company anyway.

A company only receives money to invest when they sell the stock, not when you buy it from someone else.

If the ex-pats sell all their shares in French companies, those companies don't lose a dime. And France taxes the new owner of the stock exactly what they would have taxed the ex-pats.

If the ex-pats keep their shares in French companies, then they still have to pay the French dividend tax.

All this would seem to be proving is that a lot of rich people are really stupid. They are pretty much demonstrating the point that they really don't deserve all their money.

38. So that's why Johnny Depp moved outta France!

Depp has now moved his family out of France after government officials asked him to become a permanent resident, as he feared he would end up paying tax in both countries.

He tells Britain’s The Guardian newspaper, “Well, I kind of do (live back in America). I’m between wherever I end up on location, and then the States. (I left because) France wanted a piece of me. They wanted me to become a permanent resident. Permanent residency status – which changes everything. They just want… Dough. Money… I’m certainly not ready to give up my American citizenship.”

Depp goes on to explain that if he spends more than 183 days a year in France he will have to pay income tax in both Europe and America, adding, “So you essentially work for free.”

46. But her case does rebut the claim in the thread title,

insofar as she is one of Britain's wealthiest citizens. She's not only not fleeing, but she's been publicly arguing the case that tax avoidance is wrong, and further that personally she is fine with paying the higher rate.

56. I was replying to your thread about JK Rowling

62. You respond to a point I didn't make.

The article claims the rich are fleeing Britain (and France) due to new higher tax rates.

Those "higher" tax rates could amount to 50% or 75% or even 95% - it's not material to the point I was making; the point I was making was that the claim in the thread title (that the rich are fleeing Britain) does not square with J.K. Rowling's recent public remarks that she is happy to pay taxes, since it helps finance social welfare programs.

I have no arguments to make as to how high is too high in terms of marginal tax rates. It's clear you believe 75% is above your comfort level. It would be above my comfort level, personally. But if I was Bill Gates, it could be 95% and I'd still make more in one day than most people make in a year.

58. Of course in Rowling's case, vast income and 'working' are no longer tied.

Like most of the folks making more than a million a year, JK has what you call 'passive income'. She could never write another word and still make an utterly insane amount of money. Subtract 75% and it is still insane. So I hardly think your situation is much like hers, and I hardly expect her to slog off her priciples in order to add to an endlessly growing pile of money.
She's got about a billion dollars already. A billion.

72. Taxation doesn't differentiate between those actively working and those already wealthy

I'm still working and trying to accumulate enough for retirement, so a 75% rate would truly be a disincentive for me. (And I'm a longterm Democrat who thinks a 50% tax rate is A-OK.) For those of us who don't try to escape taxes, who take very few deductions, a 75% rate hits us especially hard.

51. Singapore is going to run out of room

53. I think people like this should live in the places they put their money...

in order to evade taxes. And they shouldn't be allowed to invest or game the systems in any of the countries like the US, France or the UK. If you cannot find it within yourselves to put a tiny bit of your wealth back into the country that gave you the freedom and opportunity to earn (or inherit), and expand your wealth, fuck you. You are out of the game. Go try your luck somewhere else.

63. My Masters Thesis dealt with this

My research showed that the job stability and amount of profit that
gets re-invested locally, both decrease the greater the distance
is from the workplace site to the locus of ownership & control
i.e. proximity of company headquarters & boardroom.

71. A fact check on the British figures:

That's where the problems for the claimants start. Last week, Tax Research UK pointed out that drawing these conclusions ignores the elephant in the room: the fact that HMRC itself found evidence of £18 billion worth of 'forestalling' in the first 50p year.

In HMRC's own words:

"...there was a considerable behavioural response to the rate change, including a substantial amount of forestalling: around £16 billion to £18 billion of income is estimated to have been brought forward to 2009-10 to avoid the introduction of the additional rate of tax."

This suggests that the figures for 2009-10 are larger than would have otherwise been the case if the policy hadn't been announced and these people hadn't brought forward their declared income (certain people can alter the 'timing' of their income, sometimes to avoid changes in rates). HMRC confirm this in their latest statistics release:

"Forestalling in 2009-10 exerts a significant influence on the projected profile of combined liabilities due at higher and additional rates of tax. These are projected to have fallen in 2010-11 as incomes for the richest decline from forestalled to below ‘normal levels’, but recover in later years as these special factors subside, and economic recovery is assumed to build."

Claiming that thousands of millionaires simply 'left' the UK thus misses the point: a simple look at the figures shows that the overall number of taxpayers remained almost unchanged between 2009/10 and 2010/11. Following the introduction of the rate, much of the deterioration in declared incomes over £1 million will have been a result of abnormally high levels in 2009/10 due to forestalling.

Where forestalling occurs, we can also reasonably expect an 'unwinding' effect were the income figures will return to stability, which again demonstrates the partial picture painted by taking only the first year's effect of the policy in drawing conclusions about it's overall impact.

81. It mis time for the industrialized countries to impose sanctions on tax avoidance nations.

We sanction socialist or communists countries that we don't like...not because they are harming us but because we simply don't like them. Yet countries that allow and encourage tax avoidance for other nations are actually harming us. If we don't do this, it means to me that the rich really don't care about their own countries as long as they can accumulate wealth and power for no other purpose than to accumulate wealth and power. I guess the "banksters" own all those countries that hoard the wealth of the tax cheats.

84. And going where?

Just keep raising the rates everywhere till the only places left are China, Russia, and Somalia. Then they can choose which they wish to take their cash(after paying appropriate taxes on money earned within each country its made in) to hide out in.